Case Study Description of Novartis Venture Fund: Valuation Dilemmas
The Novartis Venture Fund is considering investing into a start up, Genedata, and must take into account the valuation analysis by both the start up as well as Venture Valuation -- an independent boutique organization that specializes in valuing high growth potential startups. NVF uses the Venture Valuation inputs to determine how best to structure the next round of financing for Genedata and the case requires the reader to discuss and analyze pricing, further financing requirements, and exit strategy for the fund.
Authors :: Benoit Leleux, Victoria Kemanian, Atul Pahwa, Katrin Siebenburger
Swot Analysis of "Novartis Venture Fund: Valuation Dilemmas" written by Benoit Leleux, Victoria Kemanian, Atul Pahwa, Katrin Siebenburger includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Genedata Valuation facing as an external strategic factors. Some of the topics covered in Novartis Venture Fund: Valuation Dilemmas case study are - Strategic Management Strategies, Financial analysis, Financial management and Organizational Development.
Some of the macro environment factors that can be used to understand the Novartis Venture Fund: Valuation Dilemmas casestudy better are - – increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, central banks are concerned over increasing inflation, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels,
increasing energy prices, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Novartis Venture Fund: Valuation Dilemmas
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Novartis Venture Fund: Valuation Dilemmas case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Genedata Valuation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Genedata Valuation operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Novartis Venture Fund: Valuation Dilemmas can be done for the following purposes –
1. Strategic planning using facts provided in Novartis Venture Fund: Valuation Dilemmas case study
2. Improving business portfolio management of Genedata Valuation
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Genedata Valuation
Strengths Novartis Venture Fund: Valuation Dilemmas | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Genedata Valuation in Novartis Venture Fund: Valuation Dilemmas Harvard Business Review case study are -
Training and development
– Genedata Valuation has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Novartis Venture Fund: Valuation Dilemmas Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Genedata Valuation in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Genedata Valuation is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Benoit Leleux, Victoria Kemanian, Atul Pahwa, Katrin Siebenburger can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Highly skilled collaborators
– Genedata Valuation has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Novartis Venture Fund: Valuation Dilemmas HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Genedata Valuation in the sector have low bargaining power. Novartis Venture Fund: Valuation Dilemmas has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Genedata Valuation to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Genedata Valuation is one of the leading recruiters in the industry. Managers in the Novartis Venture Fund: Valuation Dilemmas are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Genedata Valuation has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Genedata Valuation has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Cross disciplinary teams
– Horizontal connected teams at the Genedata Valuation are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Effective Research and Development (R&D)
– Genedata Valuation has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Novartis Venture Fund: Valuation Dilemmas - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Genedata Valuation
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Genedata Valuation does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Genedata Valuation is one of the most innovative firm in sector. Manager in Novartis Venture Fund: Valuation Dilemmas Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Genedata Valuation is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Novartis Venture Fund: Valuation Dilemmas | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Novartis Venture Fund: Valuation Dilemmas are -
Increasing silos among functional specialists
– The organizational structure of Genedata Valuation is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Genedata Valuation needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Genedata Valuation to focus more on services rather than just following the product oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Genedata Valuation supply chain. Even after few cautionary changes mentioned in the HBR case study - Novartis Venture Fund: Valuation Dilemmas, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Genedata Valuation vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Genedata Valuation has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to strategic competitive environment developments
– As Novartis Venture Fund: Valuation Dilemmas HBR case study mentions - Genedata Valuation takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Genedata Valuation has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Novartis Venture Fund: Valuation Dilemmas, is just above the industry average. Genedata Valuation needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Aligning sales with marketing
– It come across in the case study Novartis Venture Fund: Valuation Dilemmas that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Novartis Venture Fund: Valuation Dilemmas can leverage the sales team experience to cultivate customer relationships as Genedata Valuation is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Novartis Venture Fund: Valuation Dilemmas, it seems that the employees of Genedata Valuation don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Lack of clear differentiation of Genedata Valuation products
– To increase the profitability and margins on the products, Genedata Valuation needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Novartis Venture Fund: Valuation Dilemmas, in the dynamic environment Genedata Valuation has struggled to respond to the nimble upstart competition. Genedata Valuation has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Benoit Leleux, Victoria Kemanian, Atul Pahwa, Katrin Siebenburger suggests that, Genedata Valuation is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Novartis Venture Fund: Valuation Dilemmas | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Novartis Venture Fund: Valuation Dilemmas are -
Leveraging digital technologies
– Genedata Valuation can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Developing new processes and practices
– Genedata Valuation can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Genedata Valuation can use these opportunities to build new business models that can help the communities that Genedata Valuation operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Genedata Valuation can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Novartis Venture Fund: Valuation Dilemmas, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Genedata Valuation can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Novartis Venture Fund: Valuation Dilemmas suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Better consumer reach
– The expansion of the 5G network will help Genedata Valuation to increase its market reach. Genedata Valuation will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Genedata Valuation to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Genedata Valuation to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Genedata Valuation can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Genedata Valuation can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Genedata Valuation can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Genedata Valuation has opened avenues for new revenue streams for the organization in the industry. This can help Genedata Valuation to build a more holistic ecosystem as suggested in the Novartis Venture Fund: Valuation Dilemmas case study. Genedata Valuation can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Genedata Valuation can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Genedata Valuation can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Genedata Valuation can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Novartis Venture Fund: Valuation Dilemmas External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Novartis Venture Fund: Valuation Dilemmas are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Genedata Valuation needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Genedata Valuation in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Genedata Valuation needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Novartis Venture Fund: Valuation Dilemmas, Genedata Valuation may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Genedata Valuation in the Organizational Development sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Genedata Valuation high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Environmental challenges
– Genedata Valuation needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Genedata Valuation can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Stagnating economy with rate increase
– Genedata Valuation can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Genedata Valuation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Genedata Valuation has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Genedata Valuation needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Genedata Valuation demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Genedata Valuation.
Weighted SWOT Analysis of Novartis Venture Fund: Valuation Dilemmas Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Novartis Venture Fund: Valuation Dilemmas needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Novartis Venture Fund: Valuation Dilemmas is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Novartis Venture Fund: Valuation Dilemmas is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Novartis Venture Fund: Valuation Dilemmas is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Genedata Valuation needs to make to build a sustainable competitive advantage.